Telemarketing Tug-Of-War: Balancing Telephone Information Technology and the First Amendment with Consumer Protection and Privacy, Part I Consuelo Lauda Kertz Assoc
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Loyola Consumer Law Review Volume 5 | Issue 3 Article 4 1993 Telemarketing Tug-of-War: Balancing Telephone Information Technology and the First Amendment with Consumer Protection and Privacy, Part I Consuelo Lauda Kertz Assoc. Prof., Emory University Business School Lisa Boardman Burnette Follow this and additional works at: http://lawecommons.luc.edu/lclr Part of the Consumer Protection Law Commons Recommended Citation Consuelo L. Kertz & Lisa B. Burnette Telemarketing Tug-of-War: Balancing Telephone Information Technology and the First Amendment with Consumer Protection and Privacy, Part I, 5 Loy. Consumer L. Rev. 70 (1993). Available at: http://lawecommons.luc.edu/lclr/vol5/iss3/4 This Feature Article is brought to you for free and open access by LAW eCommons. It has been accepted for inclusion in Loyola Consumer Law Review by an authorized administrator of LAW eCommons. For more information, please contact [email protected]. Telemarketing Tug-of-War: Balancing Telephone Information Technology and the First Amendment with Consumer Protection and Privacy, Part I by Consuelo Lauda Kertz I. INTRODUCTION prohibits some autodialed calls and and Lisa Boardman Burnette New telephone information tech- unsolicited faxes. Emory University nology has created commercial oppor- The recent regulations and legisla- tunities for business and has enhanced tion focus on different aspects of the information services for consumers problems created by new information through innovations such as autodialed technology, but both are the result of Reprinted in part from Syracuse Law Review, calls, fax machines, pay-per-call or consumer complaints about particular 43 SYRACUSE L. REV. 1029 (1992). audiotext ("900 number") services, and abuses in the industry. Both attempt to caller identification services. The same balance consumer expectations of pri- technology also has created new ways vacy and freedom from deception with to commit telemarketing fraud and has the First Amendment rights of busi- decreased individual privacy through nesses to use the technology to dissemi- the disclosure of telephone numbers nate information for profit and with the and the compilation of credit, buying, First Amendment rights of willing con- and other personal information in data- sumers to receive that information. bases. Further, it has allowed This two-part article will discuss unsolicited telephone calls and fax three specific telemarketing practices messages to disrupt life at home and the that new technology has produced. Part office. A tension among First Amend- I will look at the 900 number call ment rights to send and receive mes- business, while Part II will examine sages, individuals' expectations of pri- live and prerecorded telemarketing calls vacy in their homes, and control over that use autodialing equipment and the private information, and consumer pro- business use of Caller ID. For each tection from deception and fraud has telemarketing practice, the article will affected the exploitation of these new analyze proposed and enacted statutes opportunities for disseminating and and regulations that deal with these collecting information.' business practices. Each restriction Public outcry has prompted fed- also will be analyzed in terms of bal- eral and state legislatures and regu- ancing constitutional and other rights. Consuelo Lauda Kertz is an associate professor at the Emory University latory agencies to create laws, to In particular, the article will address Business School. She was formerly in enhance law enforcement, and to the balance between the First Amend- law practice with the Atlanta and address consumer concerns about ment and consumers' rights to privacy Washington, D.C. firm of Sutherland, Asbill fraud, privacy, and public safety. and freedom from deception and fraud. and Brennan. Professor Kertz received For example, the Federal Commu- her B.A. in history from the University of Chicago and her J.D. from Emory nications Commission ("FCC") re- II. 900 NUMBER INFORMATION University. cently adopted regulations that im- SERVICES pose restrictions on 900 numbers to Many specialized telephone tech- Lisa Boardman Burnette is a J.D. prevent fraud and deceptive prac- nology businesses can profit from ei- candidate at Emory University School of tices.2 Congress also recently en- ther 900 or 976 information services, Law, and an M.B.A. candidate at Emory Business School. She received her B.S. acted the Telephone Consumer Pro- including the information provider, the in finance and organizational management tection Act of 1991,3 which restricts long-distance carrier, the local-ex- from the University of South Carolina. unsolicited telemarketing calls and change carrier, and perhaps a service 70 Loyola Consumer Law Reporter I Lead Articles bureau and billing service. In this controlled these services, and they gen- BOCs finally could generate their own article, "900 number" will be used to erally consisted of only one-minute information services, including 900 refer collectively to the interstate 900 calls, at $.50 per call. The media used numbers. 4 The decision spurred much and intrastate 976 services. the services primarily for publicity speculation and concern within the 900 Usually, 900 number services begin purposes.6 number industry, 5 but the BOCs im- with an information provider who cre- The pay-per-call industry flourished mediately began to roll out compre- ates the content of the message ulti- after the breakup of American Tele- hensive audiotext service plans. 6 It is mately received by the caller. Some phone & Telegraph Company unclear whether the BOCs' involve- information providers own the equip- ("AT&T"). As part of the AT&T ment will decrease competition in the ment necessary to answer their calls, proceedings, enhanced common car- industry or whether they will use their but many hire a service bureau with the rier services, including pay-per-call size and power to promote the industry services, were removed from FCC scru- by introducing innovations and new tiny.7 Title II of the Communications legitimate uses for the technology. Interactive technology- allowing Act of 1934 gives the FCC authority to In addition to changes in the regula- callers to choose different options judge the legality of charges, classifi- tory climate, technological advances in through the touch-tone keypad, in cations, regulations, and practices by the 1980s boosted the 900 number interstate or foreign wire or radio com- industry. conjunction with new computers Although the original 900 munication.8 In 1980, the FCC distin- number services primarily offered "dial- that could respond to thousands guished basic transmission services from a-porn" adult entertainment lines, in- of phone calls in a short period of enhanced services and removed en- teractive computer technology intro- time and software that could hanced services from Title II regula- duced in 1988 enhanced the industry organize facts about millions of tion.9 Enhanced services were defined because it allowed the caller to choose customers, made the pay-per-call as those that "combine basic service different options through the touchtone with computer processing applications services attractive for countless keypad. Interactive technology, in that act on ...aspects of the subscriber's conjunction with new computers that legitimate uses. transmitted information ... or. .. in- could respond to thousands of phone volve subscriber interaction with stored calls in a short period of time and equipment to manage incoming calls information."'" As part of the deregu- software that could organize facts about for many vendors. Long-distance car- lation of these enhanced services dur- millions of customers, made the pay- riers either might provide such service ing the AT&T breakup, the regional per-call services attractive for count- or might connect interstate calls to a Bell Operating Companies ("BOCs"), less legitimate uses. 7 In 1991, Ameri- service bureau. Local carriers gener- such as Ameritech and Bell Atlantic, cans spent $975 million on 900 number ally connect the caller to the long- were prohibited from any involvement services that offered everything from distance carrier and often provide bill- in information services, among other sports statistics to stock quotes to com- ing services for the information ven- things." puter support services, up from $60 dor.4 For each 900 number call, the In 1988, a United States District million in 1988." The 900 number caller is charged a fee ranging from Court lifted this restriction, allowing even became a tool in the 1992 presi- $.50 to $50, or he is charged a per-unit- the BOCs to transmit information, but dential campaign, when one George of-time fee. The local phone company it maintained the ban on the BOCs' Bush supporter created a 900 number and the long-distance carrier usually creation of information content. 2 Thus, with messages slighting Bill Clinton. 9 receive about 35 percent of the charge, the BOCs could act as service bureaus Meanwhile, the industry is explor- the audiotext service bureau receives that carried or transmitted 900 number ing other possibilities for using the new 10 percent of the charge, and the infor- services with messages created by other technology. Television producers are mation provider receives 55 percent of information providers, but they were planning interactive game shows, and the charge.' prohibited from actually creating any marketers are considering ways to use messages they carried. The court rea- the service for one-on-one marketing.' A. Growth of 900 Number Use soned that because the BOCs still pos- In fact, some cable channels are de- While variations of the pay-per-call sessed monopoly control over the local voted entirely to interactive marketing 21 telephone service have existed since telephone exchange network, as trans- "infomercials" that use 900 numbers. 1974, the 900 number surfaced in 1980 mitters, they could discriminate easily Also, many television programs have when it was used to poll viewers of the against competitor information pro- used 900 numbers to gain viewer feed- televised Ronald Reagan/Jimmy Carter viders. 3 back and participation.